Closing Bell: Stocks Soar on Last-Minute Deal on Debt Ceiling, Shutdown

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Threat To US Credit Rating Keeps Markets On Edge
Spencer Platt/Getty Images
Stocks surged Wednesday after the Senate leaders crafted a last-minute agreement to avoid a U.S. default and reopen the government, pushing the Standard & Poor's 500 index close to a record high.

The Dow Jones industrial average (^DJI) soared 205 points, or 1.4 percent, to 15,373, the Nasdaq composite index (^IXIC) rallied 45 points, or 1.2 percent, to 3,839, and the Standard & Poor's 500 index (^GPSC) jumped rose 23 points, or 1.4 percent, to 1,721 -- just four points below the high watermark it hit on Sept. 18.

Senate leaders announced the agreement following a partial, 16-day government shutdown. Congress raced to pass the measure by day's end. Without a debt deal, the U.S. will hit a Thursday deadline after which it could no longer borrow money to pay its bills, increasing the chance of a default on government debt. But it now appears nearly certain the House will follow the Senate's lead and avert disaster.

Despite the gridlock in Washington, investors have stayed largely calm throughout the twists in the current fiscal drama in Washington. Even before Wednesday's news, the S&P 500 and the Dow were up for the month.

While the issues in Washington continued to be the market's primary driver, analysts said the focus would likely turn to the third-quarter earnings season.

With 11 percent of S&P 500 companies having reported, about 57 percent have topped profit expectations, a rate that is below the historical average of 63 percent. The number of companies topping revenue forecasts has also been below the historical average.

In commodities trading, benchmark crude for November delivery rose $1.08, or 1.1 percent, to $102.29 a barrel, while gold gained $9.10, or 0.7 percent to $1,282.30 an ounce.

In corporate news, JPMorgan Chase (JPM) agreed to pay a $100 million penalty and admitted that its traders acted "recklessly" during a series of London trades that ultimately cost the bank $6 billion.
The settlement announced Wednesday by the Commodity Futures Trading Commission comes less than a month after the nation's largest bank agreed to pay $920 million and admit fault in a deal with the Securities and Exchange Commission and other U.S. and British regulators.

Intel (INTC) late Tuesday gave a revenue outlook that missed expectations and warned that production of its upcoming Broadwell processors was delayed. However, shares of the Dow component rose 1.3 percent to $23.69 as the stock participated in Wednesday's broad market rally.

More Stocks in the News:
  • Shares of Yahoo (YHOO) eased back after rising earlier a day after the company reported third-quarter earnings that were slightly above forecasts by analysts. The company's shares ended Wednesday trading down 28 cents, or 0.8 percent, at $33.10.
  • Mattel (MAT) gained 1 percent to $41.97 after the company's third-quarter net income rose 16 percent, thanks to high demand for dolls like its Monster High, Barbie and American Girl lines. The results were better than Wall Street analysts had forecast.
  • Bank of America (BAC) rose 2.2 percent to $14.56 after the second-largest U.S. bank reported that it earned $2.5 billion in the July-September period, up from $340 million a year earlier. On a per-share basis, earnings were 20 cents, beating the 19 cents expected by financial analysts.
  • Stanley Black & Decker (SWK) plunged 12.8 percent to $76.74 after the company lowered its profit forecast for the year, citing slower growth in emerging markets and a hit from the U.S. government shutdown.
  • Green Dot (GDOT) fell 1 percent to $20.66 after an analyst cut his rating on the banking holding company, citing its tough competition.
  • Shares of obesity drug maker Vivus (VVUS) fell 3.8 percent to $9.68 after a Piper Jaffray analyst downgraded the stock to "Neutral" from "Overweight," citing a disappointing sales forecast for its drug Qsymia. The analyst also trimmed his price target on the stock to $11 a share from $14.
  • Shares of oil and natural gas pipeline company Plains GP Holdings (PAGP) ended right back where they started in their New York Stock Exchange debut. The IPO was priced at $22, and though trading opened at $22.75, the stock closed Wednesday at $22.
What to Watch Thursday:
  • The Labor Department reports weekly jobless clams at 8:30 a.m. Eastern time.
  • Freddie Mac releases weekly mortgage rates at 10 a.m.
These major companies are scheduled to release quarterly earnings statements:
  • UnitedHealth Group (UNH)
  • Goldman Sachs Group (GS)
  • Philip Morris International (PM)
  • Verizon Communications (VZ)
  • Union Pacific (UNP)
  • AMR (AAMRQ)
  • Google (GOOG)
  • Capital One Financial (COF)
  • Chipotle Mexican Grill (CMG)
-Compiled from staff and wire reports.


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7 Comments

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toosmart4u

Goes to show you the republicans are not good for this country. Time to send them home in the next election. Maybe we shoud impeach all of them right now.

October 17 2013 at 5:49 AM Report abuse rate up rate down Reply
1 reply to toosmart4u's comment
willypfistergash

Hmmmm. On what grounds?

October 17 2013 at 8:30 AM Report abuse rate up rate down Reply
DOUG

Hope the stock market doesn\'t get too comfy. In 3 months we get to do this sgain. Nothing has changed, it\'s just been extended.......

October 16 2013 at 11:57 PM Report abuse rate up rate down Reply
betty_brock

Now they can go back to spending like drunken sailors. Business as usual.

October 16 2013 at 11:43 PM Report abuse rate up rate down Reply
dhhelter

It does my heart good to see that there are so many nieve people, that can\'t see the government shutdown was all a big conspiracy on the part of the government, the big banks and wall-street......and I know that they are all loving life. Because once again they have all succeeded in fooling the populice.

October 16 2013 at 10:55 PM Report abuse +1 rate up rate down Reply
joab appliance

Dont believe the hype.

October 16 2013 at 9:17 PM Report abuse rate up rate down Reply
1 reply to joab appliance's comment
Smith John

...is a sequel...

October 16 2013 at 10:29 PM Report abuse rate up rate down Reply